Correlation Between MTY Food and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both MTY Food and Goldman Sachs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MTY Food and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MTY Food Group and The Goldman Sachs, you can compare the effects of market volatilities on MTY Food and Goldman Sachs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MTY Food with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTY Food and Goldman Sachs.

Diversification Opportunities for MTY Food and Goldman Sachs

0.69

Correlation Coefficient

MTY Food  Goldman Sachs

Poor diversification

The 3 months correlation between MTY and Goldman is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and MTY Food is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MTY Food Group are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of MTY Food i.e., MTY Food and Goldman Sachs go up and down completely randomly.

Pair Corralation between MTY Food and Goldman Sachs

Assuming the 90 days horizon MTY Food Group is expected to under-perform the Goldman Sachs. In addition to that, MTY Food is 1.09 times more volatile than The Goldman Sachs. It trades about -0.08 of its total potential returns per unit of risk. The Goldman Sachs is currently generating about 0.08 per unit of volatility. If you would invest  55,760  in The Goldman Sachs on October 11, 2024 and sell it today you would earn a total of  890.00  from holding The Goldman Sachs or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MTY Food Group  vs.  The Goldman Sachs

MTY Food Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MTY Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Goldman Sachs

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Goldman Sachs reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTY Food and Goldman Sachs

The main advantage of trading using opposite MTY Food and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food position performs unexpectedly, Goldman Sachs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.

The idea behind MTY Food Group and The Goldman Sachs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.